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Business, 16.03.2020 22:32 ameliaxbowen7

The cellarmaster at a large public winery accidentally added arsenic instead of argon to a batch of merlot and accidentally killed some of their customers. Between the lawsuits and reduced sales, its future expected free cash flow will decline by $20 million in the first year and then $10 million per year for the next 5 years after that. Assume the firm has 10 million shares outstanding, no debt, and an equity cost of capital of 8%. If this news came as a complete surprise to investors (semi-strong form efficiency), how much will the winery's stock price drop upon the announcement of this event

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